Frank - I will check into the May 99 Cook report. Thank's for the lead. I still am not convinced that AbovNet deserves a valuation of 34x sales while Rmii is valued at 3.4x sales.
As far as I can tell, AbovNet has no proprietary technology other than perhaps a unique billing algorithm, network management software and some very important multilateral peering agreements.
The only reason I was looking at AbovNet was that CEO Hanson mentioned it for comparison purposes in his most recent conference call (June 1999). Perhaps, he (CEO Hanson) see's RMII more equivalent to an AboveNet type communications company rather than just an ISP or CLEC.
In June 1998, CEO Hanson was asked if he is trying to build RMI into a CLEC or ISP. (http://www.x-changemag.com/articles/861cover.html)
His response:
"..."Why do we have to be a CLEC or an ISP?" asks Doug Hanson, president and CEO of Rocky Mountain Internet Inc.(RMI). "Why can't we just be a communications company? Then, whatever the customer needs, whether it's Internet access, or data, or voice or whatever, they can come to us and get it."
RMI announced at the ISPCon '98 trade show it had signed interconnect agreements with Winstar PacNet Inc., a local area network provider, and PSINet Inc., an Internet backbone company. RMI also announced it had filed for CLEC certification in Colorado, and that it would do so in other states in the near future..."
In March 1998, RMI announces ROCKY MOUNTAIN INTERNET FILES TO BECOME A LOCAL PHONE SERVICE PROVIDER (http://www.rmii.com/home/whatsnew/pr-localfone.shtml).
On August 10, 1999 (http://biz.yahoo.com/prnews/990810/co_rmii_ap_1.html) RMI announced that it has received approval to offer competitive local exchange carrier (CLEC) telephone service in 10 additional states through its subsidiary, Rocky Mountain Broadband.
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Frank - It appears to me that RMI's business plan is to build a "hybrid" CLEC that utilizes the best networking technologies that both private and public networks provide (including ISP peering agreements, interconnect contracts, WAN and LAN services). Their goal is to provide many types of services (including WEB hosting and design) that can generate an overall 60% gross margin.
Both RMI and AbovNET sales are growing at the same rate (see my previous post for comparison). I just think at this time, RMI is undervalued and represents an excellent "speculative" investment.
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Thank you for your feed back on the AbovNet business model. I agree with you that it is not RMI's main goal to be an AbovNet, but rather to utilize some of their co-location, NAP and P-NAP designs into their private network so they can deliver these services to their major ISP customers. It's the overall sales growth from these services that will eventually determine the value of these companies.
Do you still think RMI is fairly valued at 3.4x sales? |
